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Porsche yesterday made a token offer for Scania, the Swedish truckmaker, but reaffirmed it did not intend to succeed with this mandatory bid.

The German sports carmaker sparked this general offer after it increased its stake in Volkswagen to 50.76 per cent two weeks ago. Europe’s largest carmaker, which is now controlled by Porsche, owns 69 per cent of Scania.

Porsche offered the minimum price of SKr68.52 per A share and SKr67.10 per B share. Both offers are below the stock’s Friday close and yesterday’s trading price.

Porsche yesterday reiterated it “did not have a strategic interest in buying Scania shares”. Scania said its board of executives would give a recommendation on the share offer on February 3, one week before Porsche’s bid will expire.

VW not only owns a majority in Scania but also a controlling stake of 30 per cent in its German rival, MAN. Industry executives expect the latter and Scania to merge, probably this year. Following MAN’s sale of VW’s truck assets, it is still unclear what the complicated structure would look like

The article: http://www.ft.com/cms/s/0/de9ac2a2-e692-11dd-8e4f-0000779fd2ac.html

Initial story: Porsche launches mandatory offer for Scania

Jan. 10 (Bloomberg) — MAN AG, Europe’s third-largest truckmaker, has no plans to bid for Swedish rival Scania AB as it focuses on expanding in emerging markets including China, Chief Executive Officer Hakan Samuelsson said.

MAN owns 11.3 percent of Scania’s shares, according to data compiled by Bloomberg, and said on Dec. 29 it bought options allowing it to increase its voting rights in the company to 20 percent from 17 percent. MAN is 30 percent owned by German automaker Volkswagen AG, which in turn has a further 69 percent
of Scania’s voting rights.

MAN has started operations in India and Brazil and is considering expanding into China after the worldwide recession halted a boom in heavy-truck sales fueled by growth in eastern Europe, Samuelsson said in an interview in Abu Dhabi today.
Munich-based MAN agreed Dec. 15 to acquire Brazil’s largest truckmaker from Volkswagen, its first major investment in South America.

Still, a bid for Scania “is not something we are considering,” and increasing voting rights in the company isn’t “any change strategically,” Samuelsson said.

The slump in European heavy-truck sales accelerated in November, with deliveries falling 28 percent, according to the Brussels-based European Automobile Manufacturers Association. MAN plans to shut plants for about 50 days during the first half of 2009 to curtail output by 30 percent amid job losses at Europe’s
three-biggest truckmakers.

‘Industrial Logic’

“We believe in the industrial logic of an integration of MAN and Scania,” Arndt Ellinghorst, an analyst at Credit Suisse Group AG, wrote in a research report on Jan. 8, estimating a merger could save the companies as much as 500 million euros ($674 million) a year.

Porsche SE, the Stuttgart, Germany-based maker of luxury sports cars, is separately required to bid for Scania due to its acquisition on Jan. 5 of a majority stake in Volkswagen.

In spite of the difficult conditions in the auto industry, MAN hasn’t changed its estimates for 2008 performance, according to Samuelsson. “We will see turnover that will be slightly over 2007 and profit margins will be close to 12 percent,” he said.

Porsche on Tuesday came closer to its goal of controlling a €130bn ($175bn) European car and truck empire as it increased its stake in Volkswagen to more than 50 per cent, sparking a mandatory takeover offer for the truckmaker Scania.

Porsche, the financially nimble German sports carmaker that builds only a 60th of the cars of VW, re­iterated that it had no strategic interest in Sweden’s Scania and was likely to make a low offer.’

VW owns 69 per cent of Scania, and Porsche is now required by Swedish law to make a mandatory offer for the truckmaker.

Swedish regulators are expected to name the bid price for Porsche shortly. After a period of at most five weeks, shareholders in Scania should receive the published bid.

Porsche’s takeover offer for Scania is likely to be about 15 per cent under the current share price, according to analysts at Morgan Stanley.

Porsche has hinted that any shares it would gain in the offer would be sold on to VW. That would mirror the approach Porsche took when forced to bid for Audi, the luxury car unit of VW that has a small free float.

The increase of Porsche’s stake in VW, Europe’s largest carmaker, from 42 to 50 per cent moves the drama surrounding many of Europe’s biggest names in cars and trucks forward a step, but a lot remains to be decided.

Porsche will be in control of not just VW’s well-known stable of car brands, ranging from Bugatti and Lamborghini to Skoda and Seat, but also Scania and its German rival, MAN, in which VW has a controlling stake of nearly 30 per cent.

Industry executives and analysts expect MAN and Scania to merge one day, especially as MAN owns about 20 per cent of its Swedish rival. But, following MAN’s purchase late last year of VW’s truck assets, it is unclear what the complicated structure will look like.

Porsche is also blocked from gaining full control at VW by the German regional government of Lower Saxony, which holds a blocking minority stake of 20 per cent.

It is supporting a challenge to the legality of that blocking minority in the European courts, but a decision could be more than a year away.

Porsche needs 75 per cent to enforce a domination agreement on VW, which would give it access to VW’s large cash flows.

Porsche caused turmoil in the markets last year when the carmaker revealed it held nearly 75 per cent through a direct stake and share options. But it waited several months, until VW’s shares fell from a high of €1,005 to about €250, before increasing its stake to 50.8 per cent.

Porsche officials have given conflicting signals as to when the company could take a 75 per cent stake, with some suggesting it would come this year while others say it would wait for the European court decision.

(Financial Times)